Ancestry.com launches DNA testing, gets $300M investment

updated
The Generations Network, operator of Ancestry.com has just received $300 million from Spectrum Equity Investors, a Silicon Valley buyout firm, which will take a majority stake in the company.

Ancestry.com has also just launched DNA testing of its 5 billion records, so that family members can resolve mysteries about their ancestors, i.e., find out for sure who they are and are not related to. This is smart, because it exploits peoples’ keen interest in their own histories. By charging people up to $200 for the privilege, it hopes to make the sort of money that will justify Spectrum’s investment. It comes at a time when a number of other companies are offering sophisticated DNA services, including Silicon Valley’s 23andMe.

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We’d heard Provo, Utah-based Generations had been shopping itself around for some time, but Spectrum had already been a minority investor since 2003.

Ancestry.com lets people create family trees, submit family photos and stories and allows them browse their collections. The deal comes as Ancestry is facing competition from fast-growing family tree companies such as Geni, which boasts hip Ajax-filled interactive technology. Another is MyHeritage. See our coverage of Geni and Generations Network here.

Generations operates a number of other sites too, including myfamily.com, Rootsweb.com, Genealogy.com, Family Tree Maker and Ancestry Magazine. It reportedly makes $150 million in revenue a year.

Ancestry.com’s DNA service combines DNA testing with Ancestry.com’s collection of 5 billion names in historical records. The company says it has 15 million users, and lets them take a cheek-swab test and compare DNA test results in its database, so that they can “prove (or disprove) family legends, discover living relatives they never knew existed.”

It offers Y-DNA and mtDNA tests — ranging in price from $149 to $199. The Y-DNA test analyzes the DNA in the Y chromosome, which is passed virtually unchanged from father to son. Women can have their father or other related male take the test. The mtDNA test analyzes DNA in an individual’s mitochondrial DNA, which passes from a mother to her children. The company says test results can provide better estimates of an ancient ancestors’ origins and “migration route from Africa and can aid in identifying living cousins.”

It said DNA results will soon integrate with online Ancestry.com family trees, so that users with similar last names can see how they are related, or not related.

Update: More from David Hamilton about this trend.

Update II: Other reports, including from VentureWire, say the company had previously raised $95 million in venture funding since 1998. The company’s four largest shareholders are now Spectrum, Sorenson Media, CMGI@Ventures and EsNet Group, according to the company.

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[Disclosure: To my surprise, I’ve seen Ancestry.com running ads on VentureBeat this morning, including ads running along this story. This was arranged by our advertising partner, Federated Media, without our knowledge. That’s fine (indeed, the purpose of having FM involved to arrange such deals, and why not make it targeted), but just wanted to let you guys know that there was no connection between editorial coverage and advertising!]